How Michael Jordan Still Makes $100 Million A Year
Jordan earned $100 million from Nike and other partners last year by
Forbes’ count, more than any other retired or current athlete. His 2014
haul is also more than the $94 million Jordan made in cumulative playing
salary during 15 years lacing up his hightops for the Chicago Bulls and
Washington Wizards.
Nike’s Jordan Brand is a financial juggernaut. Jordan U.S. shoe sales rose 17% last year to $2.6 billion, according to data compiled by SportScanInfo. Jordan has eight times the sales of the signature shoes for the top active NBA star, LeBron James. Jordan apparel and the international business add more than $1 billion as well. The Jordan Brand commanded 58% market share of the $4.2 billion U.S. basketball shoe market last year, up from 54% in 2013. The Swoosh’s share jumps to 95.5% if you include Nike Basketball. The competition: Adidas (2.6% share), Under Armour UA -1.41% (1%) and Reebok (0.8%).
“Nike has done an unbelievable job evolving the Jordan Brand from pure basketball to a more lifestyle brand,” says Eric Tracy, an analyst who tracks Nike at Janney Capital Markets. “That inherently pulls in a much larger target market.”
Tracy also points to Nike’s ability to exploit the sneakerhead phenomenon, which is second to none. They are constantly refreshing the Jordan retro line, which represents about 50% of the Jordan shoe business. Nike leaves a little money on the table by never producing enough to meet demand, but this always leaves Jordan fans wanting more.
Take the launch of the retro Air Jordan XI “Legend Blue” on Dec. 20. It sold out on Nike’s website in three hours. Other retailers also quickly emptied their supply. At an average price of $180,
according to SportScanInfo, Nike sold more than $80 million of the “Legend Blue” within its first week with most of the sales on the first day. This is one style over one week. For perspective, Adidas, Under Armour, Reebok and every other non-Nike/Jordan brand sold a cumulative total of $190 million for all its basketball styles over the 52 weeks of 2014 in the U.S. That is the power of Jordan.
Jordan is still the man 12 years after retiring from the NBA. (Photo by David Cannon/Getty Images)
Nike’s Jordan Brand is a financial juggernaut. Jordan U.S. shoe sales rose 17% last year to $2.6 billion, according to data compiled by SportScanInfo. Jordan has eight times the sales of the signature shoes for the top active NBA star, LeBron James. Jordan apparel and the international business add more than $1 billion as well. The Jordan Brand commanded 58% market share of the $4.2 billion U.S. basketball shoe market last year, up from 54% in 2013. The Swoosh’s share jumps to 95.5% if you include Nike Basketball. The competition: Adidas (2.6% share), Under Armour UA -1.41% (1%) and Reebok (0.8%).
“Nike has done an unbelievable job evolving the Jordan Brand from pure basketball to a more lifestyle brand,” says Eric Tracy, an analyst who tracks Nike at Janney Capital Markets. “That inherently pulls in a much larger target market.”
Tracy also points to Nike’s ability to exploit the sneakerhead phenomenon, which is second to none. They are constantly refreshing the Jordan retro line, which represents about 50% of the Jordan shoe business. Nike leaves a little money on the table by never producing enough to meet demand, but this always leaves Jordan fans wanting more.
Take the launch of the retro Air Jordan XI “Legend Blue” on Dec. 20. It sold out on Nike’s website in three hours. Other retailers also quickly emptied their supply. At an average price of $180,
according to SportScanInfo, Nike sold more than $80 million of the “Legend Blue” within its first week with most of the sales on the first day. This is one style over one week. For perspective, Adidas, Under Armour, Reebok and every other non-Nike/Jordan brand sold a cumulative total of $190 million for all its basketball styles over the 52 weeks of 2014 in the U.S. That is the power of Jordan.
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Nike kicked off its 30th anniversary celebration of the Jordan Brand at the All-Star game in New York this year. It included a Michael Jordan-themed interactive experience in Manhattan and a pop-up store in Brooklyn. The Jordan Brand has a host of roughly 30 current NBA players under contract, who showcase the product on the court, including All-Stars Carmelo Anthony, Chris Paul, Blake Griffin and Russell Westbrook. Jordan endorsers outside basketball include Derek Jeter, Nascar’s Denny Hamlin, NFL’s Dez Bryant and boxer Andre Ward. No one sells like MJ though.
Jordan retired for a third and final time a dozen years ago, but he still resonates with the public like few other people on the planet. He rates higher than any current of former athlete when it comes to consumer perception, according to market research firm Repucom. He ranks fourth among all celebrities in the U.S. and 12th globally. The only other athlete ranked in the top 20 globally is soccer’s David Beckham. Jordan’s 98% awareness level in the U.S. is on par with Barack Obama.
Nike royalties provide the bulk of Jordan’s annual earnings, but he still has sponsorship deals in place with other long-time partners: Gatorade , Hanes, Upper Deck, 2K Sports and Five Star Fragrances. For this year’s NBA All-Star game and as part of its 50th anniversary celebration, Gatorade digitally remastered its famous “Be Like Mike” ad, which initially ran in 1991 after the Bulls won their first of six titles. MJ originally signed a 10-year, $13.5 million deal with the sports drink maker. Jordan also has seven restaurants and a car dealership that kick off income.
Jordan’s two-year agreement with Novant Health expired last year. Jordan aligned with Novant, in part, as a carrot for the healthcare company to sign a team sponsorship deal in the 2012 with the former Bobcats, who changed their name to the Hornets ahead of the current NBA season (Novant remains a team sponsor).
For all of his achievements as a player and shoe salesman, Jordan has not replicated those successes in the owner’s suite. He disastrously nabbed Kwame Brown as the No. 1 overall pick in the 2001 NBA draft when Jordan was the top executive and minority owner of the Washington Wizards. The Bobcats posted the worst winning percentage in NBA history during the 2011-12 season when they won only 7 of 66 games in Jordan’s second season as majority owner.
But his timing in buying majority control in the Hornets was impeccable. Jordan was approved as majority owner in March 2010 in a deal that valued the club at only $175 million, excluding Jordan’s agreement to cover loses. NBA values have soared since then with new TV contracts and Steve Ballmer’s blockbuster $2 billion bid for the Los Angeles Clippers. Forbes values the Hornets at $725 million.
The Hornets’ are on the upswing after making the playoffs last year. They are poised to qualify again this year in the watered-down Eastern Conference. Bringing back the Hornets name has sparked interest in the team and fueled the most new season ticket sales by any NBA team. Full season ticket sales topped 10,000 this year for the first time in franchise history.
“For all of the people that think I’m in this for the short term, you better pull your socks up and just hang around – because my promise to this organization and this community is to bring a winner,” said Jordan in a speech while accepting the award as Charlotte Business Journal’s Business Person of the Year in January.
“We still have a long ways to go as an organization,” said Jordan. “We are just scratching the surface.” History says don’t bet against MJ.
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